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Until the third quarter of last year, the banks' losses in derivatives were almost entirely confined to credit default swaps — bets on failing companies and sinking investments. But credit default swaps are actually a much smaller sector, representing only 7.8 percent of the total derivatives market. Now, with these new losses in interest rate derivatives, the disease has begun to infect a sector that encompasses a whopping 82 percent of the derivatives market.
For Every Job Opening There are Four Unemployed Americans
The number of job openings in the U.S. fell by 1.4 million jobs available since December 2007 when the recession officially began. That marks a 31.4 percent drop over that time. It is generally thought that for the U.S. economy to be healthy, it needs to add approximately half-a-million jobs per month.
That means that roughly 4.1 Americans are vying for each and every job opening out there. By comparison, at the start of the recession in December 2007, there were 1.7 jobless Americans per job opening. That marks an increase of 42 percent from December 2007 to February 2009.
Currently the unemployment rate is at 8.5 percent, the highest rate since 1993. Because the Labor Department’s JOLTS report lags a month behind its unemployment report, it is safe to assume that the current number of jobless Americans per job opening is closer to 4.5 currently.
The U.S. machine tool industry is on the verge of oblivion, What was once considered to be one of America's most important strategic industries described by President Ronald Reagan in a statement on May 26, 1986, as being a vital component of the U.S. defense base the U.S. machine tool sector is in a freefall. Orders for new machine tools have virtually stopped. U.S. machine tool producers, the few that remain after years of unrelenting unfair trade practices, are doing whatever they can to stay alive.
The total U.S. market for machine tools in January 2009 was $95 million, a decline of 72 percent from the same month in 2008 when sales were at $338 million, according to AMT. The January 2009 figure was down by 60 percent from December 2007. Schildge says that orders are now off by at least 80 percent, and others in the industry say it might even be worse than that.
America Needs Electric Cars, But Not this Way
Norwegian electric carmaker Think announced last month that it intends to build a manufacturing facility in the U.S., thrusting eight states in a race to the bottom to offer the most alluring incentives to attract the company’s factory.
That could be a costly venture for Detroit’s already beleaguered Big Three automakers, however, putting them in direct competition with the Norwegian start up that is sure to be afforded with huge advantages in the form of tax abatements, free land, government-funded training for employees and use of federally subsidized power among other incentives.
Look, I'm all for profit, ok?
I'm a greedy capitalist pig and admit it. After all, I made my "nut" building a company, sold it, and now trade for a living.
Is there anything more capitalist than doing those two things?
But there is a difference between being a capitalist pig and being a robber baron, and this Wells Fargo announcement needs amplification, now that I've gotten the blast ticker out and have some time to write.
Here's the deal guys:
Spreads have widened over the last year on broker (and direct bank) mortgage pricing .vs. Fannie and Freddie bond pricing.
About 200 basis points worth.
Why is this important?
Because you, the consumer, are getting cornholed in the "pricing" these guys are "offering" you!
That is, the banks are exploiting the dislocation in pricing and the credit markets to screw you and post what Wells now says are record profits.
Are you being told about this? Of course not.
Are regulators stomping on this? Of course not.
Are you being looted to pay for this? Of course you are.
You are seeing near-zero (or actual zero) interest earned on money you loan to the bank (when you make a deposit or buy a CD you are loaning money to the bank) and yet when you go to borrow money you're being screwed with record-high spreads that the bank is pocketing - in mortgage and credit card interest rates charged.
How much does this add up to?
About $4,000 in extra profits per mortgage on top of the "usual" $1,000 profit.
That's right - the banks are making five times the "usual and customary" profit per loan, and it is coming right out of your hide.
I've been hollering about this for months (as has Mish Shedlock) but it appears that both our intrepid lawmakers and the mainstream media simply refuses to talk about it.
When does this stop?
When you, America, are tired of being ripped off and demand that it stop.
Remember, the mantra of both government and The Banks is "never waste a crisis."
So Wells comes out this morning and says they're going to make a "record" profit, claiming an expected 55 cents (.vs. mid 30s expectation)
It must be nice to be able to keep loans on the books at whatever price you feel like, receive billions of taxpayer money including "assistance" in rolling up Wachovia, and then turn out to not need it, right?
That is, if these numbers are accurate.
Wells premarket is ramping from $14.89 at the close yesterday and now trading premarket at $18.10, up over $3 or some 30%.
This leads one inescapably to the following:
* Either Wells is lying (obfuscating losses through unrealistic marks, etc) OR
* These "bailouts" were no such thing - they were a simple and transparent looting operation by the banks that is now showing up directly in "earnings" (and will shortly show up in the bonuses of executives too!)
So which is it folks?
Are the banks really that healthy? Because if they are, you've been robbed to the tune of tens of thousands of dollars per person in this country, and it is long past the time that you act to stop it.
If they aren't, then how is it that these banking executives are not residing in the graybar motel for cooking their books? Again, it is long past the time that you, the citizens of this country, act to stop it.
And while we're at it, perhaps you'd like to tally up the income you're NOT making on savings (CDs, etc) through the much lower rates of interest you're being PAID so that these guys can post "record earnings"? Naw, we don't want to hold The Fed accountable for their monetary policy - a backdoor way of looting the public even further - do we?
PS: AIG's former CEO Greenberg is on CNBC this morning and he actually used the word "LOOTING" and insisted that the government must claw back the payments that were made as a "passthrough" - exactly as I and others have called for.
While I object to the characterization that Hank Greenberg was "blameless" in AIG's morass, it is nonetheless refreshing to hear people like him talking about what we should and indeed must do - that is, claw back the inappropriate and arguably illegal "pass through" payments that in my opinion are nothing more than pure robbery of the taxpayers of this country.
WASHINGTON (AFP) – The Federal Reserve no longer sees signs of recovery this year from a prolonged recession and only weak growth in 2010, minutes of a policy-setting meeting said.
Despite massive interventions by the Fed and other government bodies to jumpstart the moribund economy and unblock tight credit, policymakers at a March meeting viewed grimmer projections than those made two months earlier.
The United States, among the earliest to enter recession after financial turmoil stemming from a home mortgage meltdown, could begin to grow again "slowly" next year despite numerous constraints, according to Fed projections.
"Real GDP (is) expected to flatten out gradually over the second half of this year and then to expand slowly next year," the minutes of the Federal Open Market Committee (FOMC)'s March 17-18 meeting said.
The central bank anticipated the recovery "as the stresses in financial markets ease, the effects of fiscal stimulus take hold, inventory adjustments are worked through, and the correction in housing activity comes to an end."
The United States plunged into recession in December 2007 after a home mortgage meltdown triggered a financial crisis that spread around the world, slashing economic growth.
FOMC chairman Ben Bernanke and his policymakers at the March meeting stared down grim staff-prepared forecasts that were sharply lower than the outlook prepared for the January FOMC meeting.
In January, the economy was expected to recover "gradually" during the second half of 2009 albeit shrinking between 0.5 percent and 1.3 percent for the full year.
The central bank had also predicted growth would accelerate to between 2.5 percent and 3.3 percent for 2010. Critics at the time had said the forecasts were overly optimistic.
"Nearly all meeting participants said that conditions had deteriorated relative to their expectations at the time of the January meeting," the latest FOMC minutes said.
The slowdown was broad, across sectors, and included large declines in equity prices, a further drop in house prices, mounting job losses that threatened to further depress consumer spending and weakening business capital spending.
Policymakers noted "the apparent sharp fall" in foreign economies that was hitting US exports, reducing their supporting role for the US economy in the near term.
They also highlighted significant uncertainty about the prospects for the economy, which slid into recession in December 2007.
Most meeting participants saw "predominating" downside risks in the near term, mainly due to potential "adverse feedback effects" from rising unemployment weighing on consumer spending and mounting losses at financial institutions further tightening credit conditions.
"All told, this suggests that third-quarter and fourth-quarter GDP results aren't likely to show any sort of recovery, while the unemployment rate could breach the upper range of the FOMC's projections of 9.2 percent, and perhaps reach double-digits," said Terri Belkas at Forex Capital Markets.
In a speech in Tokyo Wednesday, Dallas Federal Reserve chief Richard Fisher said that the economy probably contracted in the first three months of the year at an annual pace "very similar" to the previous quarter, when GDP shrank 6.3 percent.
Policymakers in March voted to unanimously hold the Fed's base interest rate at a historically low range of zero to 0.25 percent, where it has been since mid-December.
They also announced a 1.15-trillion-dollar initiative to unblock frozen credit, including ramped-up purchases of mortgage-backed securities and the launch of program to buy long-term Treasury bonds.
Brian Bethune, chief US financial economist at IHS Global Insight, suggested the Fed should try to encourage demand for its new Term Asset-Backed Securities Loan Facility (TALF), intended to unlock credit flows for auto loans and credit cards.
"The Fed needs to work with Congress to iron out some of the wrinkles that are impeding a more rapid uptake of investors and borrowers within this program. This clearly needs to be a short-term priority," Bethune said.
UPDATE 1-U.S. dealers submit no bids for Treasuries -NY Fed
NEW YORK, April 9 (Reuters) - U.S. bond dealers submitted no bids on Thursday to borrow the Federal Reserve's Treasury holdings at its daily auction, two days after it raised the cost to borrow them, the New York Federal Reserve said.
"No propositions were received for this securities lending operation," the New York Fed said on its Website.
The U.S. central bank announced on Tuesday the minimum fee rate to borrow Treasuries from its System Open Market Account will be increased to 0.05 percent, effective Wednesday, from 0.01 percent.
Analysts said the increase is aimed at encouraging bond dealers to rely more on the market instead of the Fed to obtain Treasuries to cover short positions. For more see [ID:nN08513766].
"The Fed may also be attempting to make it a little more difficult to short Treasury securities, thereby pushing up consumer interest rates," Barclays Capital strategist Joseph Abate wrote in a research note late Wednesday.
Abate said the Fed will gradually push up the lending rate to 25 basis points or higher, "although the timing of future increases is unclear."
The U.S. trade deficit in February unexpectedly plunged on U.S. import demand falling over a cliff. The overall U.S. trade gap shrank to $26.0 billion from a revised $36.2 billion shortfall the month before. The February figure was far smaller than the market forecast for a $36.5 billion gap. Exports actually rebounded 1.6 percent while imports plummeted 5.1 percent. The improvement in the overall deficit was due primarily to a drop in nonoil imports. The February nonoil deficit fell to $22.2 billion from $31.3 billion in January. The oil deficit also shrank but not as much to $13.7 billion from $14.8 billion in January.
The drop in imports was widespread but led by declines in industrial supplies and capital goods excluding autos. Consumer goods and autos also fell. The rise in exports was led by increases for consumer goods and automotive.
The oil deficit was nudged down by a 15.1 percent fall in barrels imported and also by slippage in the price of imported oil. The average price of imported oil edged down to $39.22 per barrel in February from $39.81 per barrel the previous month.
Year-on-year, overall exports slipped to down 16.9 percent in February from down 16.5 percent in January while imports worsened to down 28.8 percent from down 22.8 percent the previous month.
The February trade report will cause economists to recalculate their estimates for first quarter GDP growth (higher) but the big worry is how much consumers and businesses are cutting back-even for imported goods. The latest trade report emphasizes how much consumers and businesses have pulled back on spending. But for today, markets have forgotten yesterday's gloomy FOMC minutes and are focusing on Wells Fargo's positive earnings report.
Wal-Mart same-store sales miss target
By Steve Gelsi
Last update: 8:12 a.m. EDT April 9, 2009
NEW YORK (MarketWatch) -- Wal-Mart Stores Inc. said Thursday March same-store sales in the U.S. rose 1.4%, excluding fuel. Analysts expected an increase of 3.2%, according to a survey of analysts by Thomson Reuters. The world's largest retailer said net sales for the five weeks ended April 3 fell 1.9% to $36.2 billion. Wal-Mart said it expects first-quarter earnings from continuing operations to be toward the high end of its range of 72 to 77 cents a share. Analysts expect earnings of 76 cents a share, according to a survey by FactSet Research
Timbar Packaging and Display -70
Manitowoc Plant -103
Ceco Closes Plant -120
Graphic Packaging International -30
Aavid Thermalloy -90
City of Paducah -14
3M Offers Buyouts to 3,600
Home Builder 120 - Employees Down to 4
Alliance Castings -394
Barnhardt Mfg. Co. Closing Plant -20
Andover Schools -55
Detroit May Close 20 Schools -600
Noble International Closing -13
Durham School Services -63
Power Marine Motor Sports Closing -20
DA-Tech Closing Plant -40
Ball Corp. Closing Plant -46
North Carolina State Govt. -700
Southwest Cement Co. -40
Country Coach -460
Ellsworth Hospital -14
TOTAL - 9,832 est